How we were looking for investments and why they were abandoned.

Hello! So we have our own blog on Megamind, for which we are grateful to TM. My name is Anton and I represent the Mneniya.Pro review collection service. In this blog, we will write in detail about the development of our project, as well as share interesting cases on the topic of reviews, conversion, sales growth, loyalty and customer relationships. Today we would like to talk about our experience in dealing with investors. First of all, this material will be of interest to beginner startups who are looking for financing options and choose a further path of development. In the article we touched upon the topic of attracting funds and share our thoughts on whether investors are really needed at the start of a business.

Looking for investment

We started the opening of the service Mneniya.Pro in 2013. Like many other start-up IT entrepreneurs, having heard a lot of “success stories” about transactions in the venture capital market and having read startups, we believed in the tale of good investors. And they were 100% sure that we were great, and that any self-respecting investor would consider it an honor to invest in our project even before launch. At the time, there was already a ready-made MVP in our hands, in which we had to invest $ 500 of personal savings, but we were not in a hurry to leave our main jobs. And instead of actively looking for the first clients, they began their activities by storming investment funds, trying to attract investments in the project and shift some of the risks to them. Now I understand that it was stupid, but we learned from our mistakes.
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The search for investments began with the creation of a spreadsheet in Excel and entering there of all individuals who are somehow connected with investments in Russian Internet projects. In the open spaces of the network, we found 105 representatives of the venture industry (foundations, business angels, etc.) and wrote a personal letter to each of them. In the letters we talked about the idea, and also attached additional materials - a presentation, a business plan, a startup questionnaire, CV founders. By the way, a spreadsheet from Excel has been preserved so far - I publish it in a blurred form so that no one has any temptation to use it.



Having sent 105 letters, we received answers from 8 representatives of the funds. I quote one of them, the rest looked approximately the same:

Thank you for the offer and the information sent. And what is your revenue now / how many stores are connected? We are ready to consider SaaS for e-commerce either with a large client base (hundreds of connected stores), where you can run monetization models, or projects with revenues of $ 15 thousand per month.

Nevertheless, 2 funds invited us to the Skype-call, and one business angel even agreed to meet in person. None of those negotiations were unsuccessful, therefore, after several months of searching for investments, it was nevertheless decided to “give in to fate”. That is, tighten our belts and leave the comfort zone - we really believed in our product.

Ordered to survive

So, we left the main jobs and were finally able to devote ourselves entirely to the project. We did not achieve investments, and, except for ourselves, there was no one to rely on. Each had some personal savings for which he could live and work, but there were still families — so the pocket was empty enough quickly. Naturally, about any investment in marketing, sales, etc. (according to the original business plan) speech did not go. Perhaps, only our wives continued to believe in us, but sometimes I find myself thinking that even for them we looked at that time enough ... sorry.

The more hungry a person is, the more aggressive he is - we became convinced of this again and again. True, their aggression was put out not on others, but on the process of connecting customers. A few months after the start of active work, the Mneniya.Pro team still managed to demonstrate the benefits of using the service to several companies, which eventually agreed to become customers on a commercial basis. The amounts of transactions were catastrophically small, but they gave us the strength to move on. We were convinced that the hypothesis was confirmed, and that, with the correct positioning of the product and active sales, he has the right not only to exist, but to a completely normal life for himself.

Refusal of investment

Hundreds of commercial offers sent out, dozens of negotiations - as a result, several more companies connect to the service and we begin to believe in Mneniya.Pro with a new power.

Suddenly, the project got into a startup accelerator. There, after the selection, we were offered an investment of $ 20,000 for 12% of the company. I want to remind you that at that time the revenue was negligible, and the money was urgently needed.

Having a little thought and having weighed all the pros and cons, we decided to reject the seemingly tempting proposal. There were several reasons for this - firstly, the amount was small, it would hardly have helped to make a quantum leap in the development of the project. Secondly, under the terms of the agreement, investors received 2 votes against our 1 on the board of directors, that is, having a controlling stake in hand, in fact we were deprived of the opportunity to manage the company. Investors commented on this clause in a rather prosaic way: “Do not worry - this is standard practice, everyone works like this.” Maybe someone is satisfied with this approach, but at that time we decided to reconsider our attitude towards investments and temporarily slow down the venture history. It was necessary to focus on finding customers and improving the service.

So are investors really needed?

The product continued to develop, the customer base was replenished, and as a result we overcame the break-even point. Already on working capital began to attract the first employees, first from friends and acquaintances, a little later - from the labor market. New key positions have appeared in the team - marketing director and sales director. This helped accelerate customer acquisition.

Now the project involved 2 programmers, 5 sales managers and 1 marketer. Business grows and develops, benefits customers.

We recently tried to enter the Polish market, but the competition in the form of a strong local player Opineo.pl slightly corrected plans. Over the next few years, our goal is to connect a thousand companies to the platform and become the largest in Eastern Europe, having taught customers to trust reviews on the Internet collected by the Mneniya.Pro service.

Looking back, I understand that if we took the money from investors, the situation would not fundamentally change. The project would develop now at the same level, the only difference would have been a “tail” in the form of investors. Here, most likely, the law is valid - if you are destined to go through the "valley of death" and survive, you will overcome it without investment. There is no need to go far for examples - take at least Russian CallBack Hunter or JivoSite services, which continue to grow rapidly without investment. And they feel an order of magnitude more confident than their main competitors, who managed to attract external financing.